Adrian Ash (The Daily Reckoning):

The collapse in India’s gold demand during 2007-09 might seem good reason to question the fundamental strength of gold buying worldwide.

After all, if the world’s No.1 gold buyers can’t keep up with record-high gold prices, who can…?

But the plain fact, as BullionVault first forecast in spring 2009, is that China has overtaken India as the number one private gold buyer this year. The typical Chinese New Year gold rush has already begun (thanks in part to 3% discounts at major retailers), and robust demand looks likely to continue through 2010 if not beyond.

Full-year 2009 private demand in mainland China could outstrip India, the former No.1 buyer, by one quarter if not one third. Short of a (very unlikely) collapse in Q4 demand, full-year private gold buying – including jewelry and retail investment – is set to have grown 10% from 2008’s record in volume terms, rising 26% by value to equal $13.5 billion or more.

On recent trends, that would equate to more than 2.0% of China’s famously massive household savings (up from 1.0% ten years ago) and account for almost one ounce in every eight sold worldwide.

Basis the GFMS consultancy’s data (published by the World Gold Council), physical gold purchases by mainland Chinese households in 2009 was already running 19% ahead of India’s private demand for Q1-Q3.

Given China’s continued economic growth (certain to hit Beijing’s 8% target according to the Chinese Academy of Social Sciences) – not to mention the surge in money-supply and credit growth over and above GDP (put at 23 and 27 percentage points respectively by Deutsche Bank) – private gold consumption in Q4 most likely remained very robust. Whereas India’s private gold off-take during Oct-Dec. continued to shrink in the face of record-high prices. Indian bank and wholesale dealers have reported below-market bids from their clients throughout the autumn. Comments from the Bombay Bullion Association put Q4 imports 54% lower from 2008’s already disastrous finish.

Fourth-quarter Chinese consumption should be in the range of 116 tonnes (if it adds 37% to Q1-Q3 volume, as per the 5-year average) to 128 tonnes or more (if Q4 tops Q3 by volume, as it has each year since 2004). The running total to end-Sept. was 315 tonnes. It is likely to finish full-year at 431-443 tonnes.

India’s private demand, in contrast, ran 45% below 2008 levels during the first 9 months of the year, most notably depressed during Q1 (down 83% from Q1 08, with Indian investors becoming physical dis-hoarders on GFMS’s data; overall, India was a net exporter of gold for the first time since the Depression according to market historian Timothy Green). Applying the 5-year average ratio of Q4 demand to Q1-Q3 figures (27% added to 264 tonnes), full-year private off-take would come in at 336 tonnes, the lowest total since at least 1991 on GFMS’s data. . . .

Click here for the rest of Mr. Ash’s analysis at The Daily Reckoning.

Company insiders have intimate knowledge of how their particular business operates. They know when sales are likely to rise. They know about a new marketing strategy that could boost the company’s bottom line. They know about industry conditions that may be changing for the better. And they know the company’s balance sheet like the back of their hands.

A company insider might sell shares for any number of reasons. He or she might need cash for a major purchase or decide to donate a lump sum to charity (yes, this has happened). So an insider selling shares does not necessarily mean bad news for the stock in question.

However, an insider will buy shares of his own company for only one reason: He thinks the stock is set to make him money. There is “no better tip-off to the probable success of a stock” than insider buying, according to Peter Lynch. We couldn’t agree more. That’s why we’re always monitoring insiders’ buying trends.

Here are three names that have recently come up on our radar:

First up is ViroPharma (VPHM: NASDAQ). ViroPharma’s shares were battered in February when the company announced it did not achieve its desired endpoints with a Phase 3 trial for a treatment for cytomegalovirus.

After the announcement and subsequent drop in share price, four different insiders purchased VPHM stock for $3.97–4.79 per share.

Next up is Evergreen Energy Inc. (EEE: NYSE) As shares sank to new lows between 30–40 cents, 10 insiders bought in. A few days later, Evergreen announced an agreement with Sumitomo Corp. to advance their joint K-Fuel project in Indonesia. The announcement sent shares soaring — the stock rose more than 100% just days after the announcement.

Of course, there was no way to know about the lucrative K-Fuel deal — unless you were a company insider with access to this kind of information. But thanks to Securities and Exchange Commission filings, we can keep tabs on insiders’ buys and sells…

The good news in late January has helped make EEE one of the few bright spots on the NYSE…shares of EEE are up 135% on the year (although the stock plummeted much of the latter half of ’08).

Our final insider buying alert is Mad Catz Interactive Inc. (MCZ: AMEX). This stock is down roughly 40% so far this year, with its biggest drop occurring on Feb. 12, after posting poor third-quarter results.

What do these company insiders know about Mad Catz that we don’t? Only time will tell…

Source: Three Ways to Follow the Smart Money